Deal reached on AZ data centers
Arizona lawmakers have reached an $18 billion budget deal that includes a three-year pause on new tax exemptions for data centers. This compromise addresses concerns over corporate handouts, water, and energy usage. The full Arizona State Legislature is scheduled to vote on the budget deal later this week.
Lawmakers in Arizona have announced a compromise on a budget deal exceeding $18 billion, which includes a significant pause on tax exemptions for data center developments. Introduced in 2013, these tax breaks have historically incentivized data center investments in the state, with business leaders crediting them for attracting substantial business.
The proposed agreement stems from a conflict between Democratic Governor Katie Hobbs, who advocated for completely ending these tax exemptions due to her opposition to corporate handouts, and Republican lawmakers who sought to maintain them to support companies that have already invested in Arizona. The resulting compromise is a three-year moratorium on new data center tax exemptions. This pause will not affect existing data centers that currently receive tax breaks, nor will it prevent new data centers from establishing operations without seeking these specific exemptions.
The deal comes amidst growing concerns over water and energy consumption by data centers. The Arizona State Legislature is slated to vote on the comprehensive budget package, including this data center tax exemption pause, later in the current week.